The revisions are being seen as a signal of a shift towards more targeted, risk-based scrutiny of cross-border related-party transactions (RPTs).
The CBDT has released draft “Income-tax Rules and Forms” for public consultation ahead of the Income-tax Act, 2025, coming into force on April 1.
The drafts have been uploaded on the e-filing portal and will remain open for stakeholder feedback until February 22, according to a government statement.
Notably, the draft rules significantly reduce delegated legislation, with their number proposed to be cut to 333 from 511, and the number of forms brought down to 190 from 399, following consolidation and removing redundancies.
A key change is the introduction of draft Form 48, which will replace the Form 3CEB as the accountant’s report on international related-party transactions and specified domestic transactions. While the form has been redesigned with drop-down selection fields and auto-population of certain information to ease filing, professionals said the compliance burden could rise due to expanded disclosures.
“The revised form introduces more disclosures. These include a detailed computation of the arm’s length price and any adjustments applied in the computation, the arm’s length range derived from comparable benchmarks, specific information on certain cost base elements, particularly costs incurred by associated enterprises and whether these have been included or excluded in the arm’s length price determination,” said Jitendra Jain, partner, Price Waterhouse & Co LLP.
According to Jain, the move appears as a “nudge” to taxpayers for keeping ready comprehensive transfer-pricing documentation at the time of submitting the accountant's report.
Apart from transfer pricing, the draft rules also propose a revamp of perquisite valuation and compliance requirements.
Richa Sawhney, partner, Grant Thornton, said the proposed Rule 15 replaced the existing perquisite taxation framework under Rule 3 of the Income-tax Rules, 1962, and presented perquisites and valuation parameters in a tabulated format for easier reference. Thresholds have been updated in some cases, including the ₹200 per meal limit for free food and the annual exemption for employer gifts, which has been increased to ₹15,000.
Sawhney said the revised rules also increased the taxable value of cars provided by employers by laying down higher standard monthly valuations. Further, no perquisite value will be assigned to employer loans not exceeding ₹2 lakh compared with the earlier threshold of ₹20,000.
Another notable change relates to digital record-keeping. The draft requires prescribed professionals to maintain electronic books of accounts and other documents in a manner that ensures they remain accessible in India at all times.
“The backup needs to be kept in servers in India and needs to be updated daily. This requirement is in sync with similar requirements laid down for companies under the Companies Act, 2013, and related rules,” Sawhney added.
The rules also propose accountant-certified filing for claiming foreign-tax credit to reduce incorrect claims, recognise the digital rupee for specified payments, and consolidate forms related to audit reports, statements and certification for tax deducted at source. “These changes, along with the tech-savvy architecture of the forms, will help in simplifying and modernising compliance,” Sawhney said.
Sandeep Jhunjhunwala, partner, Nangia Global, said the draft reflected long-pending reforms, including updating perquisite thresholds that had remained outdated for years.
“The rationalisation of archaic perquisite thresholds, such as tax-free at-work meal value and gifts received from employers, brings the income-tax framework closer in line with contemporary economic realities,” he said.
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